Opening Bell: 05.20.13

Author:
Updated:
Original:

Hedge Fund Owner Gets Subpoena to Testify (DealBook)
By subpoenaing Mr. Cohen, the government indicated that it was pursuing a case against SAC itself. Federal guidelines discourage prosecutors from soliciting grand jury testimony from the target of an investigation, which suggests that Mr. Cohen was being treated as if he were a potential witness against his own fund. While the authorities have not settled on a strategy, according to the lawyers and executives briefed on the case, they are pursuing an avenue that could possibly lead to an indictment against SAC, accusing it of allowing traders to carry out illicit activity over years.

Yahoo Is Planning to Buy Tumblr for $1.1 Billion (NYT)
For Yahoo and its chief executive, Marissa Mayer, buying Tumblr would be a bold move as she tries to breathe new life into the company. The deal, the seventh since Ms. Mayer defected from Google last summer to take over the company, would be her biggest yet. It is meant to give her company more appeal to young people, and to make up for years of missing out on the revolutions in social networking and mobile devices. Tumblr has over 108 million blogs, with many highly active users.

Enron No Lesson to Traders as EU Probes Oil-Price Manipulation (Bloomberg)
Shell, London-based BP and Statoil ASA, three of Europe’s biggest oil explorers, are under investigation for potential manipulation of prices in the $3.4 trillion-a-year global crude market. The involvement of McGraw Hill Financial’s Platts, which publishes pricing data, hearkens back to other pricing scandals including Enron, and more recently, Libor. “We’re making exactly the same mistakes we did with Enron, just with a different commodity,” Robert McCullough, an energy consultant, said by telephone from Portland, Oregon. “The same manipulation we saw in electricity and gas pricing is what we’re seeing in oil.”

Gold Slump Hits Silver (WSJ)
Falling appetite for the safe haven of gold has pushed the metal down 20% since the start of the year as inflation fears faded and global growth improved. In Asia, investors have zeroed in, especially on Japan where the central bank's aggressive easing measures have kick started an economic recovery and pulled up shares. The biggest moves on Monday were felt in silver, which dropped 9% in the first 10 minutes of Asian trading, touching its lowest level since September 2010. It later recouped some losses to trade down 3.9%. Silver is less liquid than gold and therefore more susceptible to such sharp moves. Spot gold fell 1.2% to $1,344 a troy ounce, and is off 8.9% since the beginning of May.

Barbie eyeing a Manhattan penthouse in search for new dream home (NYP)
Barbie is moving from her California mansion and embarking on a quest for new digs that could land her in a posh penthouse with Central Park views, makers of the doll say. Toymaker Mattel has hired a team of top-notch interior designers to create three “dream houses” — in New York, California and India — and will announce its choice in August. ... Barbie’s VP of marketing, Lori Pantel, said the story reflects the doll’s evolution as an independent woman. “As a workingwoman with over 135 careers, Barbie is proud to have a Manhattan home,” Pantel said. “It’s a glamorous work space to host movers and shakers.”

Fierce battle for corporate loans sparks US bank risk concerns (FT)
The amount of business loans made by US banks jumped to $1.55tn at the start of May, up 10 per cent compared with the same period last year, according to data from the Federal Reserve. “Every 10 years or so, banks make some horrible mistake and it usually starts with easy money,” said Mike Pinto, vice-chairman of M&T Bank, a regional lender part-owned by Warren Buffett’s Berkshire Hathaway. “We are worried about the competitive atmosphere. It creates the temptation to do silly things.”

European leveraged loan market under threat from US/HY (Reuters)
Animal identification company Allflex, German insulation firm Armacell and German industrial ceramics firm CeramTec are among a growing group of European borrowers seeking to finance buyouts via the US leveraged loan market, lured by greater liquidity, covenant-lite structures and leverage that cannot be matched in Europe. ... Deals financing via the US is a further blow to the European leveraged loan market, which has already seen a diminishing borrower base, as companies including Italian gaming company Sisal, UK fashion retailer New Look and German forklift company Kion have opted to refinance loans with high-yield bonds. "The market is hot and the pie for loans has been reduced in Europe because of less M&A, compounded by the high-yield and US markets, which are attracting previous European leveraged loan borrowers," a leveraged finance banker said.

Apple faces grilling over US tax rate (FT)
One sign of the effectiveness of Apple’s international tax planning is that the share of profits it reports in the US is lower than the share of its sales, according to Martin Sullivan, chief economist at Tax Analysts, a non-profit tax research group. Since much of its product design, marketing and other critical activities take place in the US, the share of profits booked there might be expected to be far higher, according to Mr Sullivan.

Despite curbs, China's vast hot money triangle flourishes (Reuters)
"It's very simple," said one agent surnamed Choi, dressed in sandals and ripped jeans, as he served tea in a back office where larger transactions are typically carried out. "You give me renminbi here. Then we deliver Hong Kong dollars to you in Macau. We can move tens of millions each day," he said, glancing up at six security camera images of his shop front flickering on a flat-screen TV.

Goldman to Exit ICBC With $1.1 Billion Stake Selldown (Reuters)
Goldman Sachs on Monday launched the sale of about $1.1 billion worth of Hong Kong-traded shares in Industrial and Commercial Bank of China, offering to sell its entire remaining stake in the world's biggest bank by market value. The sale by Goldman would be the final chapter in the Wall Street bank's investment into China's ICBC. Prior to its 2006 IPO, ICBC was a technically insolvent state institution, reeling from the bad loans that saddled China's financial industry.

H-1B Models Strut Into U.S. as Programmers Pray for Help (Bloomberg)
An oversight by the U.S. Congress two decades ago led to the inclusion of models in the H-1B class. A 2007 bill to put them in another category -- and let their numbers soar -- failed. Its sponsor: then-Representative Anthony Weiner of New York, who quit Congress in 2011 after engaging in lewd online behavior. While models will get less than 1 percent of the visas, the H-1Bs are increasingly coveted. Demand was so high this year that the government’s cap on applications was reached only five days after the filing period opened on April 1. “It’s the one exception that we all scratch our heads about,” Neil Ruiz, an analyst at the Brookings Institution’s Metropolitan Policy Program, said of the addition of models as the only H-1B category that requires no bachelor’s degree.

Related

guggenheim

Opening Bell: 10.13.17

The SEC wants to know what's going on between Bob Diamond and Guggenheim; Marc Cohodes makes amends with Overstock; the Russians have even infiltrated Pokemon Go; and more.

Opening Bell: 4.29.15

SEC to propose new rules re: executive pay; Elizabeth Warren gains a friend in fight to curb bailouts; Twitter CEO's no good very bad day; "Baseball Coach Suspended After Forcing Players To Spit In His Face"; and more.

Opening Bell: 05.29.12

Greece Pours $22.6 Billion Into Four Biggest Banks (Reuters) The long-awaited injection—via bonds from the European Financial Stability Facility rescue fund—will boost the nearly depleted capital base of National Bank, Alpha, Eurobank and Piraeus Bank. "The funds have been disbursed," an official at the Hellenic Financial Stability Facility, who declined to be named, told Reuters. The HFSF was set up to funnel funds from Greece's bailout programme to recapitalise its tottering banks. The HFSF allocated 6.9 billion euros to National Bank, 1.9 billion to Alpha, 4.2 billion to Eurobank and 5 billion to Piraeus. All four are scheduled to report first-quarter earnings this week. The news came as two government officials told Reuters that near-bankrupt Greece could access 3 billion euros, left from its first bailout programme, to cover basic state payments if efforts to revive falling tax revenue fail. U.S. Ready for Europe Fallout, Says Fed Official (WSJ) "There's absolutely no reason for people in the United States to get all in a dither," Federal Reserve Bank of Philadelphia President Charles Plosser said in an interview with The Wall Street Journal. Mr. Plosser said that in the short run, uncertainty in Europe might even work in the U.S. economy's favor, via lower U.S. interest rates and energy prices. Greece to Leave Euro Zone on June 18, Says Guy (CNBC) Greece will leave the euro zone on June 18 if the populist government wins the country’s elections on the 17 as the rest of the euro zone rounds on "cheaters," Nick Dewhirst, director at wealth management firm Integral Asset Management, told CNBC Monday. “The euro zone is a club but you get cheaters who get away with it until everyone finds out and at that point you need to remove them otherwise everyone will cheat. It’s better for Greece to leave,” Dewhirst said. He added that Greek society was built on cheating and scheming, saying “everyone does it” but that voters elsewhere in the euro zone were now calling Greece to account. “The basic question is that a German has to increase working from 65 to 67 and that is to pay for Greeks retiring at 50. The 17th of June is the perfect opportunity to say either 'we’ll behave' or 'we’ll carry on cheating,'" he said. Facebook Debacle Turns High Hopes Into Potentially Mood-Souring Skepticism (WSJ) It is impossible to measure the impact of Facebook's flubbed deal on overall investor confidence. But there is at least one sign of possible fallout: More than $3 billion was yanked from U.S. stock mutual funds by small investors in the week ended Wednesday, according to EPFR Global Inc. in Cambridge, Mass. That was the worst week for withdrawals since March. In the previous week, investors added $311 million to U.S. stock mutual funds. David Guthrie, a 30-year-old actor in Toronto, bought 15 shares of Facebook on its opening day. Before then, he had bought just one stock, yet saw the market as a place to make his savings rise in the long run. Now he feels burned. "If Facebook had made a lot of money, I'd try it again," Mr. Guthrie says. After the stock's disappointing slide, "I would never put big money into the stock market." Zoos' Bitter Choice: To Save Some Species, Letting Others Die (NYT) ...Ozzie, a lion-tailed macaque, will never father children. Lion-tails once flourished in the tops of rain forests in India, using their naturally dark coloring to disappear into the height of the jungle. Though there are only about 4,000 remaining in the wild, not one among Ozzie’s group here in St. Louis will be bred. American zoos are on the verge of giving up on trying to save them. As the number of species at risk of extinction soars, zoos are increasingly being called upon to rescue and sustain animals, and not just for marquee breeds like pandas and rhinos but also for all manner of mammals, frogs, birds and insects whose populations are suddenly crashing. To conserve animals effectively, however, zoo officials have concluded that they must winnow species in their care and devote more resources to a chosen few. The result is that zookeepers, usually animal lovers to the core, are increasingly being pressed into making cold calculations about which animals are the most crucial to save. Some days, the burden feels less like Noah building an ark and more like Schindler making a list. Icahn Takes Chesapeake Energy Stake (WSJ) Carl Icahn skewered Chesapeake Energy Corp.'s CHK board for corporate governance controversies and "irresponsible actions" while disclosing he acquired a sizeable new stake in the company. Euro Likely Worthless as Collector's Item (Bloomberg) FYI. JPMorgan Beefs Up China Unit With $400 Million Injection (Reuters) "The additional capital will better position the bank in the evolving regulatory environment and cement our commitment to clients in China," Zili Shao, Chairman and chief executive of J.P. Morgan China, said in a statement on Monday. "The capital will be used to expand the bank's branch network, develop products, increase corporate lending, and recruit employees," Shao added. Europe Turns To US For Loans (WSJ) In the latest symptom of Europe's financial turmoil, the region's riskier companies are bypassing banks and investors at home and turning to the U.S. for loans. European companies borrowed some €14.4 billion (about $18 billion at current rates) in the U.S. leveraged-loan market this year through Friday, more than double the €6.7 billion for all of 2011, according to data from S&P Capital IQ LCD. That is the highest amount since at least 2007, the height of the last boom in leveraged lending, when full-year loan volume was €12.2 billion, according to S&P. How Boaz Weinstein And Hedge Funds Outsmarted JPMorgan (NYT) By May, when fears over Europe’s debt crisis again came to the fore, the trade reversed. The London Whale was losing. And Mr. Weinstein began to make back all of his losses — and then some — in a matter of weeks. Other hedge funds were also big winners. Blue Mountain Capital and BlueCrest Capital, both created by former JPMorgan traders, were among those winners. Lucidus Capital Partners, CQS and a fund called III came out ahead, too. Inside the hedge fund world, some joked that Mr. Weinstein had been able to spot the London Whale because he himself had been a whale once, too. Drunk Brooklyn woman crashes car through Long Island home (NYDN) A drunken Brooklyn woman crashed her Mercedes into a Long Island home Monday, smashing through the house and landing in the backyard, cops said. Sophia Anderson, 21, failed to turn left or right when the road she was driving on in Huntington deadended at a T-intersection with another street, officials said. She left a train of wreckage as she smashed through the modest house on Southdown Rd., missing the 90-year-old homeowner and her caretaker. Anderson, treated and released at Huntington Hospital, was arrested and charged with driving while intoxicated, police said.